Scarborough area retention lease renewed

The Australian government has agreed to renew the retention lease over the Scarborough area fields offshore Western Australia held by ExxonMobil Corp. and BHP Billiton.

The joint venture has pledged to spend about $250 million (Aus.) to move the proposed Scarborough gas development to a final investment decision.

The lease (WA-1-R) has been renewed for another 5 years. The field was discovered by the two companies on the Exmouth Plateau in the early 1980s.

Due to its remote location, deep water and the lack of accompanying liquids, the companies have struggled to design a viable development concept.

The preferred option for Scarborough and nearby Thebe field (owned by BHP in WA-346-P) is for a floating LNG scheme. The combined resource is estimated to be 8 tcf of gas. The Thebe permit, which expires in January 2016, also has been granted a retention lease.

The partnership has not ruled out the alternative of piping the gas to either the North West Shelf project or the Pluto project, both operated by Woodside Petroleum with LNG trains on the Burrup Peninsula.

The retention lease renewal is understood to be the partnership’s last chance of providing a development scheme. Front-end engineering and design must be completed before the lease expires in 2020 or the government will strip the companies of ownership.